The net neutrality rules, published Friday, represent the realization of a long dream of Democratic President Barack Obama and his appointed FCC Chairman, Julius Genachowski (pictured). (Source: Television Broadcast)

The rule ensures that content delivery services like YouTube can not be discriminated against by ISPs.

Limitations to new rules won't please everyone, though

It was the night before Christmas and all through the halls, not a creature was stirring -- except for the U.S. Federal Communication Commission's five man board. They were busy delivering a special holiday present to internet firms -- the first publication of the net neutrality rules, which they (largely begrudgingly) passed on Wednesday.

The rules, available here (PDF; 1.0 MB) directly from the FCC, offer many predictable terms and a few seasonal surprises as well.

I. What's Inside

The rules will give the FCC for the first time the ability to regulate internet networks and prevent service providers from blocking any "lawful" traffic or throttling it.

Some companies, such as Comcast, America's largest cable internet provider, have already been accused of trying to shake down internet content providers to maintain access.

One slight surprise is that the rules also make it difficult for service providers to accept fees to speed up traffic. Many expected this to be legal.

Telecom attorneys fought to allow it. But Democratic Commissioner Michael J. Copps ardently opposed it, saying it would stifle innovation and make providing internet content a business only accessible by the wealthy. The FCC apparently agreed with Mr. Copps' complaints, writing, "In light of each of these concerns, as a general matter, it is unlikely that pay for priority would satisfy the "no unreasonable discrimination" standard."

II. Tiered Usage Fees?

Parts of the bill bear some ambiguity. The bill does seem to allow for tiered data usage schemes, but it indicates that it would monitor such systems for abuse. This make it unlikely that telecoms could achieve their dream of charging heavy users (such as those who stream Netflix) hundreds in monthly fees ($0.01-$0.03 MB fees has been proposed by some). Ultimately, with little profit incentive, telecoms may be reticent to adopt tiered usage.

III. Throttling "Illegal" Traffic -- Allowed, but is it Feasible?

Another ambiguous concept is the idea that "illegal" traffic may be throttled. States the document:

In the Open Internet NPRM, the Commission proposed that open Internet rules be subject to reasonable network management, consisting of "reasonable practices employed by a provider of broadband Internet access service to:(3) prevent the transfer of unlawful content; or (4) prevent the unlawful transfer of content."

The problem here is that ISPs like Comcast would have to prove that bittorrent or peer-to-peer (P2P) traffic was illegal. Some legal services use these formats to distribute music, movies, or other file types, and the academic world often relies on them for file transfers. All it would take would be one case of mistaken throttling and the ISPs could be slammed with big legal fees and fines.

Of course the government is considering, under the pending ACTA internet treaty, forcing taxpayers to fund the government monitoring networks for copyright infringement and other illegal behavior. However, it is questionable whether this is even possible why maintaining sufficient service fees and avoiding false positives.

However, as explained in the Open Internet NPRM and subsequent Public Notice, mobile broadband presents special considerations that suggest differences in how and when open Internet protections should apply... Moreover, most consumers have more choices for mobile broadband than for fixed (particularly fixed wireline) broadband... In addition, existing mobile networks present operational constraints that fixed broadband networks do not typically encounter. This puts greater pressure on the concept of "reasonable network management" for mobile providers.

The document suggests that mobile internet "openness" may be revisited by rulemakers once it becomes more established. And pending schemes -- like the idea of "pay per site" revealed by top telecom firms at a recent conference -- may be ruled by the FCC to be outside the realms of "reasonable" management.

V. Could this "Gift" Get Returned?

Ultimately the rules could face challenges from multiple sources. Telecom firms and internet service providers could file suit against the provisions in federal courts. Their fate in such cases, though, would be uncertain. While they won past suits, such as the spring federal court ruling that Comcast could throttle traffic, those wins came largely because the FCC had been unable to ratify an official series of rules -- which it has now done. With those rules in place, the courts would likely be more hesitant to override the FCC and diminish its Congressionally granted ability to regulate national communications.

Other challenges could come from Congress. Telecoms have funneled millions to the campaigns of certain politicians, which will likely help them secure future challenges to the legislation by Congress. The funded candidates are largely Republicans -- Sen. John McCain (R-Ariz.) alone accepted from AT&T and Verizon $237,000 in direct donations, $3.6M in lobbyist-raised funding, and free personal service to his Arizona ranch. Republicans are about to gain control the House of Representatives, but are in the minority in the Senate -- plus they do not control the White House. Thus the possibility of legislative opposition remains very viable, but will have to wait for future election years.

ISPs, besides wireless firms, likely will be less than happy with the new rules, which set limits on their internet profiteering. However, they still have many viable options to maintain their profits and tight control of local markets. One option is to lobby state officials to ban citizens in counties or townships from banding together and creating their own faster, cheaper municipal Wi-Fi services. ISPs have already tried to kill several municipal efforts in such a fashion.

For content deliverers like Google (owner of YouTube), the rules definitely fulfill a key item on their wish list. But they have expressed concerns about the rules apparent allowance of telecoms breaching net neutrality in the mobile realm. Thus it might not be exactly how they wished for it, but the ratified and published "In the Matter of Preserving the Open Internet Broadband Industry Practices" regulations document still gives them something thankful for this year.

"If a man really wants to make a million dollars, the best way would be to start his own religion." -- Scientology founder L. Ron. Hubbard